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Social Norms, the Welfare State, and Voting

  • Lindbeck, Assar

    ()

    (Institute for International Economic Studies, Stockholm University)

  • Nyberg, Sten

    ()

    (Stockholm University)

  • Weibull, Jörgen W.

    ()

    (Stockholm School of Economics)

This paper analyzes the interplay between economic incentives and social norms in a public finance context. We assume that to live off one's own work is a social norm, and that the larger the population fraction adhering to this norm, the more intensely it is felt by the individual. It is shown that this may give rise to multiple equilibria and to non-linearities that do not arise from economic incentives alone. In the model, individuals also vote on taxes and transfers. Hence, the social norm influences both their economic and political behavior. We show that monotone and continuous changes in external factors may result in non-monotone, and even discontinuous, changes in political equilibrium.

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Paper provided by Stockholm University, Institute for International Economic Studies in its series Seminar Papers with number 608.

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Length: 33 pages
Date of creation: 03 Nov 1997
Date of revision:
Publication status: Published in The Quarterly Journal of Economics, 1999, pages 1-35.
Handle: RePEc:hhs:iiessp:0608
Contact details of provider: Postal: Institute for International Economic Studies, Stockholm University, S-106 91 Stockholm, Sweden
Phone: +46-8-162000
Fax: +46-8-161443
Web page: http://www.iies.su.se/

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  1. Lindbeck, Assar, 1995. "Welfare State Disincentives with Endogenous Habits and Norms," Working Paper Series 441, Research Institute of Industrial Economics.
  2. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-27, October.
  3. Bernheim, B Douglas, 1994. "A Theory of Conformity," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 841-77, October.
  4. George A. Akerlof, 1978. "A theory of social custom, of which unemployment may be one consequence," Special Studies Papers 118, Board of Governors of the Federal Reserve System (U.S.).
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